BROKEN SWORDS! (MICROSOFT – NOKIA MERGER)

Wow! Whatta an interesting week to be a gadget lover!

brokensword

  • Google announced KitKat 4.4 their next Android love.
  • Samsung unveiled new Note 3 and Galaxy Gear watch
  • Amazon did introduced Kindle Paperwhite 2
  • SONY and LG is putting their new high end series
  • Apple announced their September 10 iPhone iOS 7 event

While all the above seem positive

  • Microsoft announced it brought Nokia for 7.1B Dhah!

From Microsoft point of view this came as no surprise. Stephen Elop (Nokia CEO) is the old Microsoft guy Microsoft send to Nokia as Trojan Horse to get Nokia alined with Windows Phone instead of Nokia marrying the Android army. The only viable Windows Phone licensee for Microsoft while old OEM Samsung, LG, HTC all went to bed with Google beloved Andy. Meanwhile Nokia, from being the most prime mobile phone vendor in the pre iPhone era, are killing themselves of being such a historic company a 6 years ago. It seems to me Microsoft – Nokia got entangled in such a mess that they themselves can’t even get out with their broken swords.

MICROSOFT’S DILEMMA – A PC COMPANY IN THE MOBILE AGE!

– For Microsoft their lucrative OS licensing system is broken, dead, finished and done with. You can’t sell OS when Google give away such wonderful Android (Chromium too) for free. The problem for Microsoft in mobile is that Android has completely destroyed the value of a licensed OS. They did what Linux couldn’t do and now every darn gadget I know of comes in “Android Embedded” form. No, you can’t sell OS (ecosystem) by the means of hardware as Apple does either if you don’t speak hardware and don’t have the content to go with. Microsoft’s traditional software model is broken and Microsoft doesn’t really know what to do. Bingo!

NOKIA’S DILEMMA – A HANDSET MAKER IN THE SOFTWARE AGE!

– No matter how good, you can’t sell your hardware if you waste your chance to build or go with a robust OS and content ecosystem (like Android/ iOS/ Amazon) and brush up your expertise on hardware and logistics to differentiate . So now your Microsoft Windows Phone OS experiment failed that your Lumia hardware is still so good almost everyone (Except MS) wish that it runs Android. Overall it’s now too late to build your own OS while your expertise is on hardware and can’t even go to bed with Android due to your ego and hard ties behind MS. Bingo!

Now what..?

Nokia has already sold it’s Head Quarters year back to recover expenses, can’t recover sales from loss of 90% to 4% market share drop and left with no where to go other than bankrupt. MS on the other hand failed to get traction on Windows Phone from other old Windows Mobile OEM manufactures (or PC) and can’t let Nokia die cos it’s the only Windows Phone licensee which had some success (Lumia Series) which going fast down the drain if it do not pump even more money on it.

So where do we go from here…

and comes the fight of the Broken Swords. The Microsoft – Nokia Merger. Done. Deal.

Now the difficult part. How do we correct that what went all wrong? Will others stay on their laurels (Google, Samsung, Apple, Amazon, Xiaomi) while Microkia get their act under one hood, figure things out and plan ahead to ‘Empire Strike Back’ ? and when? Are there any place left in mobile ecosystems to grow-in profitability? Do customers care? Will enterprise hold their breath till they get this sorted out? Would they?

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Gosh, now the Ballmer has left Microsoft with such an ordeal, who would be the next superman, superhero CEO to take up this challenge? Coming MS CEO is gotta be another super CEO like Steve Jobs or Bill Gates, Do we have a candidate? I don’t think that anyone is around there to take up the challenge, have the guts and the vision to drive forward. It’s again the famous “Burning Platform” for both parties and specially for Nokia for this time for real! Ironically Stephen Elop could be Microsoft’s next CEO too!

Then in the Microsoft end, here’s the mess Steve Ballmer leaving for his successor:

  1. Windows 8 and Office have failed to produce break-through turnaround in Microsoft’s gradual decline cash-cow business. It has found no business model to survive in today’s Google and Apple invented could centric App, Service Content ecosystem model. iPad, Android succeeded without MS Windows or MS Office anywhere near them.
  2. The Surface tablets have more or less died in the market.
  3. The company’s just been through a massive top-level organizational change. That process will be disrupted while everyone waits to see if the new structure will stick with the new CEO (unlikely; new CEOs almost always want to change things).
  4. And now Microsoft needs to mesh and fix the Nokia and Microsoft businesses. There’s a cultural challenge. There are also operational challenges. It’s incredibly difficult to manage an operating system to please both your in-house hardware team and your licensees. They always want conflicting things. Microsoft claims it can both license Windows Phone and run Nokia. Whatta bluster, it will not work in practice. It’s an almost ridiculously complex situation. Who could make all of it work? Who has the ego big enough to even try?

nokia-blow-mind

Now to match iOS, Android duopoly ecosystem, MS need more than what MS has failed to do. Zune, Win Mobile, Tablet PC, Bing anyone? In a pre WINTEL world there were many PC OS systems, none survived well. Even Apple was 90 days from bankruptcy when MS put money on it to breath. But that genius guy called Steve Jobs turned it around for Apple with a per-determined plan, and then after the iPhone era was also just like that. None survived well. Palm OS, HP Web OS, RIM, Alcatel, Ericsson, Symbian, Meebo and now Nokia all dead and burned their platforms.

I think there may be room for at least 4-5 OS ecosystems in the world, the issue is none has the vision, guts, funds and time to get there while only main one or two can make money on this business. Widows-Mac OS, iOS-Android duopoly proved that. Samsung may be the new Dell and lucky child for the moment while Amazon is the company to look forward as a successor.

MS says it got in to 3rd place in mobile passing BlackBerry, Come on, you are beating already dead horse. You should be at least like Amazon to survive this onslaught. Otherwise MS will only loosing all the money it made on Windows and Office trying to get there as No 3 in mobile and retain it. The issue is they are already there after trying all this hard. But is there money in it? No way! To be successful Microsoft-Nokia would need to find a new business model that will challenge and render obsolete App, Ad and content combined hardware ecosystem business models pioneered by Apple, Google, Amazon and the likes. A very very risky undertaking even for the one time kings of the past to say the least. And to make matters worse they are even loosing their core business competence already. Windows 8.1 anyone?

(This is extracted from the web)
By far the smartest strategic thing either Nokia or BB could have done would have been to accept their weakness – they didn’t have an adequate OS or ecosystem – and focus on their strengths.

  1. BlackBerry should have adopted Android and made it enterprise-ready, with BBM for consumers. And, of course, those hardware keyboards.
  2. Nokia should have adopted Android-stock, and used their unmatched supply chain and distribution to do to their competitors, well, exactly what Nokia had been doing to their competitors for the last decade (if you think Samsung is running over everyone today, in 2007 they could only manage less than half of phones compared to what Nokia shipped.

Both BlackBerry and Nokia would have gotten a good OS and thriving Android ecosystem for free and been able to compete and differentiate themselves on the exact same area they had previously. To put it another way, RIM and Nokia had never been successful because of their OS or ecosystem, yet both decided their best response to iPhone iOS and Android was to build a new OS! Alas!

Building a healthy app ecosystem is probably the most difficult problem in technology even the expert Microsoft could not still do it right.

You need an API that can be built upon
You need an OS that developers want to use
You need consumers who are willing-to-pay
You need a liquid marketplace
You need to overcome the opportunity cost of developers working on other platforms

And so, for BlackBerry and Nokia at last, here came the fall.

Mobile computing will continue to evolve in form of new business models where hardware is not the source of profits but a distribution channel. Chances are that the new Microsoft together with what’s left of Nokia devices will not be a part of this now-showing future.

We will see.

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